May 9, 2014

JULY 19, 2013

Who makes minimum wage?

MinimumWage_640pxThe controversy over Washington, D.C.’s “living wage” ordinance, which may prompt Wal-Mart to pull out of as many as six new stores planned for the city, has drawn new attention to those near the bottom of the nation’s wage ladder. The ordinance would require large, non-union retailers to pay their workers above the District’s $8.25-an-hour minimum wage. But who are minimum-wage earners, exactly?
Perhaps surprisingly, not very many people earn minimum wage, and they make up a smaller share of the workforce than they used to. According to the Bureau of Labor Statistics, last year 1.566 million hourly workers earned the federal minimum of $7.25 an hour; nearly two million more earned less than that because they fell under one of several exemptions (tipped employees, full-time students, certain disabled workers and others), for a total of 3.55 million hourly workers at or below the federal minimum.
That group represents 4.7% of the nation’s 75.3 million hourly-paid workers and 2.8% of all workers. In 1979, when the BLS began regularly studying minimum-wage workers, they represented 13.4% of hourly workers and 7.9% of all wage and salary workers. (Bear in mind that the 3.55 million figure doesn’t include salaried workers. But BLS says relatively few salaried workers are paid at what would translate into below-minimum hourly rates. Also, 19 states besides the District have minimum wages higher than the federal standard; people who’d be minimum-wage workers in those states aren’t included in the 3.55 million total.)
People at or below the federal minimum are:
  • Disproportionately young: 50.6% are ages 16 to 24; 24% are teenagers (ages 16 to 19).
  • Mostly (78%) white; fully half are white women.
  • Largely part-time workers (64% of the total).
MinimunWageTableThey work in industries that you might expect: Just over half (51%) work in the leisure and hospitality industry, about 16% in retail, 9% in education and health services, and the rest scattered among different sectors. Broken down occupationally, the picture is similar: Nearly 44% are in food-preparation and serving-related occupations; 15% are in sales and related occupations, and the rest are scattered.
They’re also more likely to live in the South than anywhere else. In the West South Central states (Texas, Oklahoma, Arkansas and Louisiana), 7.3% of hourly workers make the federal minimum or less — the highest rate among the nine Census Bureau regions —  followed by the South Atlantic (5.8%) and East South Central (5.7%) regions. In the Pacific region (California, Oregon, Washington, Alaska and Hawaii), by contrast, only 1.5% of hourly workers earned the federal minimum or less.
Economists continue to debate the extent to which minimum-wage laws reduce poverty, income inequality and/or overall employment. What’s clear, though, is that after a three-step increase in 2007-09, today’s minimum wage buys more than it did recently, but its real purchasing power is about where it was four decades ago — and below its late-1960s peak.